“Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a US default.”

“Although the Treasury would still have limited capacity to make payments after Oct 17th it would be exposed to volatile revenue and expenditure flows. The Treasury may be unable to prioritize debt service, and it is unclear whether it even has the legal authority to do so.”
“The prolonged negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the US dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the US. This “faith” is a key reason why the US AAA rating can tolerate a substantially higher level of public debt than other AAA sovereigns.”

“The US is the most heavily indebted AAA rated sovereign, with a gross debt ratio equivalent to double that of the AAA median.”